Custom, Excise & Service Tax Tribunal
M/S. Sangam India Ltd vs Cce & St,Jaipur-Ii on 5 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/Date of Decision:05.07.2016
Excise Appeal No.51285/2014-EX(SM)
[Arising out of Order-in-Appeal No.170(OPD)CE/JPR-II/2013 dated 30.10.2013 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur-II, Jaipur]
For Approval and Signature:
Honble Shri B. Ravichandran, Member (Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
M/s. Sangam India Ltd. Appellants
Vs.
CCE & ST,Jaipur-II Respondent
Appearance:
Rep. by Ms.Rinki Arora, Advocate for the appellant.
Rep. by Shri S. Nunthuk, AR for the respondent.
Coram: Honble Shri B. Ravichandran, Member (Technical) Final Order No.52426/2016 Dated:05/07/2016 Per B. Ravichandran:
The appeal is against the order dated 30.10.2013 of Commissioner (Appeals), Jaipur. The appellants are engaged in the manufacture of man made blended yarn, etc. liable to central excise duty. They were availing cenvat credit on inputs, capital goods and input services. Proceedings were initiated against them to demand and recover service tax credit of Rs.41,00,765/- availed during the financial year 2005-06 and 2006-07. These credits relate to two services viz. Goods Transport Services (GTA) and Business Auxiliary Services (BAS). On both these services, the appellants were liable to pay service tax on reverse charge basis though they were recipient of service. The point of dispute is that these service tax liabilities have been discharged by them by debiting the cenvat credit account and not by cash. Another dispute relating is to credit taken on the basis of two invoices on input services and capital goods (Rs.1,27,823/- and Rs.6,930/-), which were also denied on the ground that the invoices are not in the appellants name but in the name of their sister unit. The Original Authority confirmed the demand with equal amount of penalty. On appeal, the Commissioner (Appeals) vide the impugned order upheld the original order.
2. Ld. Counsel for the appellant submitted that the Commissioner (Appeals) denied the credit on service tax paid on GTA and BAS only on the ground that the service tax was discharged by debit entry in the cenvat credit account. The period involved in the present case is prior to 1.3.2008 i.e. prior to amendment of Rule 2(p) of Cenvat Credit Rules, 2004. She relied on the various decided cases of the Tribunal and High Courts to submit that the service tax liability discharged by using cenvat account is correct and proper. Regarding the credit on invoices, not in the appellants name, ld. Counsel submitted that they have reversed the amounts in March, 2008 itself. No credit was taken by the sister unit. The credit taken by the appellant on these two invoices is a bonafide mistake and as such, imposing equal penalty on them is not justifiable.
3. Ld.AR submitted that the appellants are not eligible for cenvat credit in view of the fact that the tax liability has not been discharged in terms of Cenvat Credit Rules, 2004. Payment by debiting the cenvat credit could not be the basis for credit.
4. Heard both the sides and examined the appeal records.
5. The main point for decision is correctness of payment of service tax on reverse charge basis by the appellant and thereafter, the eligibility of such amount taken as credit by them. The admitted facts are that the appellants are liable to pay service tax on GTA and BAS on reverse charge basis. For paying such tax liability, they have utilized credit available in their cenvat account. I find such utilization has been held to be legal by the Tribunal in Pragti Paper Ltd. Final Order No.ST/391/ dated 11.02.2011. In the said order, the Tribunals decision in the case of ITC Ltd. 2011 (23) STR 41 (Tribunal-B) has been distinguished on facts. I find that the various High Courts also held that service tax liability on GTA can be discharged by cenvat debit. The Honble Punjab & Haryana High Court in the case of Nahar Industrial Enterprises Ltd. 2012 (25) STR (P&H) and Honble Himachal Pradesh High Court in the case of Auro Spinning Mills 2012 (26) STR 413, Honble Gujarat High Court in CCE Vs.Panchmahal Steel Ltd. 2015 (37) STR 965 (Gujarat), Honble Chattisgarh High Court in the case of Union of India Vs. Mohini Industries - 2015 (37)STR 979 (Chattisgarh), Honble Madras High Court in the case of M/s. Cheran Spinners Ltd. 2014 (33) STR 148 held that the service tax liability on GTA services can be discharged by cenvat debit. Similarly in respect of BAS, Honble Punjab & Haryana High Court in the case of Nahari Fibres Order No.STA.38 of 2010 decided on 24.08.2010 held that the service tax liability in respect of commission paid to foreign agents under BAS can be paid by using the cenvat debit. Considering the above settled position, I find no justification for denial of such credits on the ground that the service tax has been paid by using the debit account as unjustified. Accordingly, the impugned order is set aside with reference to such denial.
6. Regarding the credit taken on invoices not in the name of appellant, the admitted facts are that the immediately on being pointed out by the Audit, the appellants reversed the credit on both the invoices and reported compliance. They have pleaded bonafide mistake and also on the fact that the sister unit did not avail any credit on the said invoices. I find that the show cause notice appropriating the reversed amount and proposing penalty was issued much beyond the normal time without any due justification. Considering the facts as mentioned above, I find no justification for imposing equal penalty with reference to such reversals. Accordingly, the penalty imposed on this account is set aside. The appeal is disposed of on the above terms.
[Order dictated & pronounced in open court] ( B. Ravichandran ) Member (Technical) Ckp.
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